The present invention relates to a system for enabling payment for information products that can be transferred electronically over a nonsecure network, and more particularly, the present invention relates to a payment system that can be used to enable an Internet user to make a payment to another Internet user for information products of value that can be electronically transferred over the Internet.
The Internet has emerged as a large community of electronically-connected users located around the world who readily and regularly exchange significant amounts of information. The Internet continues to serve its original purposes of providing for access and exchange of information among government agencies, laboratories, and universities for research and education. In addition, the Internet has evolved to serve a variety of interests and forums that extend beyond its original goals.
The Internet has been considered as a potential new marketplace for information products. It is now physically possible to transfer information products such as articles, software, cartoons, etc., via the Internet.
Using the Internet as a marketplace has several advantages. Information products can be delivered electronically without physical packaging. Because information is easily duplicated with the point and click of a mouse on a user's workstation, the cost of manufacturing and reproducing inventory closely approaches zero, leaving the cost of creating or synthesizing the information as the dominant cost. Once an information product has been developed, there may be little or no cost of manufacturing or inventory since a copy of the product can be shipped whenever a buyer makes a purchase given that the merchant has the bandwidth available. Given that the cost of inventory on the Internet is close to zero, there are potentially tens of thousands of information sellers, i.e. people with ideas or information products to sell, on the Internet. Another advantage of using the Internet as a marketplace is that, depending on the kind of information product involved, processing of a buyer's order can be automated, so there is no need for a worker to manually intervene to complete a transaction.
Although the Internet presently has the capability to serve as a marketplace for new information products, use of the Internet for this purpose has been slow to develop. One reason that accounts for this lack of development is that it is difficult to pay for information products using the Internet. A user cannot send cash or a check via the Internet and sending a check via physical delivery services is slow. Sending a credit card number over the Internet poses security problems. Moreover, even if it were reasonably safe to send credit card numbers, there are a lot of potential sellers of information products who do not have--and could not qualify for--the required merchant accounts. Credit card companies require a seller who accepts credit card for payment, to have a merchant account. Conventional merchant accounts require a relatively high standard of credit worthiness and a financial guarantee. The need for a conventional merchant account impedes commerce in the Internet marketplace because an average Internet user may have a difficult time qualifying for a merchant account.
Accordingly, there is a need for a system that solves the payment problem on the Internet to enable development of a commercial market.